Hong Kong's economic growth has, in part, been a result of the Hong Kong dollar being tied to the US dollar for the last 13 years. Consequently, the Hong Kong stock market is highly sensitive to US interest rates. US investors were originally attracted to Hong Kong because the region was a virtually regulation-free environment, was apolitical, and it maintained a low and extremely uncomplicated tax system. These characteristics of the open market policy have resulted in substantial investments by US firms according to the US State Department. In 1996, US investments to Hong Kong totaled $12 billion. Approximately 1,000 US firms currently employ 10 percent of the Hong Kong work force, making the US the 2nd largest foreign presence in the country. Hong Kong has maintained an import policy based on "no tariffs and few government imposed obstacles to hinder US imports" and "no preferential or discriminatory export and import policies which affect foreign investors." Top US investors include Motorola, Digital Equipment Corp., Sea-land, Exxon, Citibank, Caltex, AT&T, IBM, Kodak, Bank of America, Coca-Cola, and Pepsi Cola.
With respect to the reversion to the PRC, the US policy toward Hong Kong is marked by a sound determination to preserve Hong Kong' prosperity and to ensure that there is little disruption in the current way of life. The Clinton Administration has fully supported the Joint Declaration, yet the formulation of the US - Hong Kong Policy Act establishes domestic legal rights to treat Hong Kong as an "entity" separate from the PRC. The US recognizes that it is not directly involved in the Hong Kong's transition, but has indicated that it will strongly support the nation's development. The Trade Development Council has taken significant steps to continue open communication by launching "Operation Pacific Bridge" in the US. The goal is to intensify Hong Kong's position as mediator between US investors and China's markets.
The American Chamber of Commerce and the government of Hong Kong concluded that 90 percent of international investors remain optimistic about Hong Kong after 1997. Only 20 out of 533 companies surveyed admitted to making plans to move out of Hong Kong in the next three years. Those investors not leaving are reassured by the $62 billion in foreign exchange reserves held by the Hong Kong Monetary Authority to defend the local economy in the event of a crisis. Finally, US firms will have opportunities to make continued inroads into the Hong Kong economy as the transition proceeds. Some of the top industry prospects US investors should keep an eye on include: construction equipment, telecommunication equipment, electronic power systems, electronic parts and components, insurance, drugs and pharmaceuticals, travel and tourism, waste water treatment technologies, and plastic materials.
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